Iraq has resolved a dispute over Kurdish autonomy, which threatened to split the fledgling government, Prime Minister Iyad Allawi said on Thursday.
Kurdish leaders had warned they would quit Allawi's government unless the UN Security Council backed Kurdish autonomy in a resolution that was unanimously adopted on Tuesday.
"This issue has been resolved," Allawi told reporters, saying he had discussed it with Kurdish leaders in Baghdad. He gave no further details.
The UN resolution refers to the government's commitment to a federal Iraq, but does not mention a transitional law passed in March, which guarantees Kurdish self-rule in the north.
With the formal end to the US-led occupation only 20 days away, the interim government cannot afford tension between Kurds and majority Shias, whose top cleric had sworn to oppose the UN measure if it endorsed the transitional law.
One of Iraq's two main Kurdish leaders, Jalal Talabani, gave the UN resolution mixed marks.
"We are happy that the Security Council resolution mentioned federalism, but we regret that it did not mention the Kurdish people," he told a Kurdish television station.
Mainstream Shia support is vital to the government, which has outlawed the Mehdi Army militia of Shia cleric Moqtada al-Sadr, who launched an anti-US revolt in April.
Five people were killed in fighting between Iraqi police and Sadr's militia in Najaf on Thursday, hospital sources said. It was the first clash in the holy city since the Shia militia agreed a truce with US-led forces last week.
Gunfire echoed through the streets as police sped past in pick-up trucks.
"I stood at the door of my house to take a look at the fighting and I was shot," said Khaled Rida, 18, in Najaf hospital with a bullet wound in the neck.
Ali al Qusaidi, a doctor at the hospital, said three Iraqi policemen were among the dead and many policemen were among 27 wounded in the fighting that broke out overnight.
Skirmishes lasted through the day and on Thursday afternoon shots were fired around Sadr's house, his spokesman said.
Sadr's militia and US forces agreed to withdraw from Najaf under the June 4 truce designed to end fighting near holy shrines that has deeply troubled Shias in Iraq and beyond.
Iraqi police returned to the streets on June 5 under the deal, which US forces hoped would mark the end of Sadr's uprising. At its peak, the revolt engulfed cities across the mainly Shia south and led to hundreds of deaths.
Allawi promised a tough response to any violence by Sadr.
"We have called upon him and others to abide by the rule of law and to respect peaceful means. Any continuity of using force will be dealt (with) by the Iraqi government in a very serious and strong way," he declared.
Allawi announced on Tuesday a plan to demobilise up to 100,000 fighters loyal to nine factions which had opposed Saddam Hussein. Many are to join Iraq's nascent armed forces.